Sourcing automation – where to start?

In the second installment of our Scaling Sourcing Excellence webinar series, Dylan Alperin, VP of Professional Services, and Madeline Roberts, Data Analyst at Keelvar, delved into the critical topic of sourcing automation and its role in elevating procurement practices.

As organizations grapple with tight budgets and increasing demands for cost savings, automation emerges as a key player in transforming sourcing strategies.

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The automation imperative: why now?

Madeline emphasized that automation is not just a trend but a necessity for procurement teams in 2024. With 42% of sourcing professionals identifying automation as a top priority, it's clear that those who fail to embrace this shift risk being left behind.

"Automation is becoming increasingly vital in the procurement space," Madeline explained, highlighting its potential to "reduce manual tasks, increase efficiency, and enable teams to focus on more strategic initiatives."

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Overcoming procurement challenges with automation

Dylan and Madeline highlighted several common challenges in procurement, including under-resourced teams, non-standardized tender management, and fragmented spend. Automation directly addresses these issues by allowing teams to manage larger volumes of spend more efficiently, standardizing processes, and consolidating decisions into a single, visible platform.

Dylan pointed out, "If you're being asked to do more with less, this is how you do that. Automation allows you to tackle more spend and manage more suppliers with less work."

Best practices for implementing automation

To successfully implement sourcing automation, it's crucial to automate good sourcing practices. Dylan stressed the importance of first establishing a robust sourcing strategy before attempting to automate. "There is no point in automating poor sourcing behavior," he emphasized.

"You want to ensure you have a good sourcing strategy in place, and in return, you'll have a successful automation process."

"You want to ensure you have a good sourcing strategy in place, and in return, you'll have a successful automation process"

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Addressing misconceptions about automations

There are several misconceptions about sourcing automation, particularly regarding its applicability to tail spend. While tail spend automation can streamline processes, Dylan and Madeline clarified that it may not be the best starting point for most organizations.

Tail spend automation often fails to bring competitive bidding, supplier consolidation, or alignment with strategic goals, making it less impactful compared to automating more strategic spend categories.

"Tail spend is not the best place to start," Dylan advised, "You're definitely missing a lot of opportunities if you're ignoring the more strategic spend categories higher up in your spend curve."

"Tail spend is not the best place to start"

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Identifying strong use cases for automation

The webinar provided a framework for determining which sourcing events are ripe for automation. Key indicators include high-frequency, repetitive procurement requests with well-defined workflows and a consistent list of suppliers.

Dylan emphasized that the more frequently a process is executed, the more it benefits from automation, reducing friction and increasing efficiency. "Volume and velocity cause friction, and friction drives pain. Automation is the key to removing that friction," Dylan noted.

Dylan also shared several compelling examples of organizations that have successfully implemented sourcing automation. These ranged from a global tech leader automating thousands of mini-tenders in ocean freight, reclaiming countless hours for strategic spend, to companies using automation to handle high-velocity requests in categories like temporary labor and logistics.

"These organizations are already seeing huge wins," Dylan shared. "Automation isn't just a future concept—it's delivering value right now."

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Conclusion: automation as a strategic Lever

In conclusion, sourcing automation is a powerful tool that can transform procurement practices by reducing costs, speeding up cycle times, and increasing spend under management. Dylan and Madeline's insights make it clear that the path to scaling sourcing excellence lies in the thoughtful adoption of automation, ensuring that teams can do more with less while driving strategic value.

Curious about how to get started with sourcing automation? Watch the full webinar on-demand to explore how these strategies can be applied to your organization.